Monday, November 27, 2017

TransCanada Says Nebraska Regulators' Preferred Route Would Add Five Miles -- November 27, 2017

This is how the mainstream meda reported this story:
From Hardisty, Alberta, Canada, to Patoka, Illinois, the Keystone XL route is about 2,000 miles long give or take a few hundred miles. Keep that in mind when reading the linked story from Reuters:
The Canadian pipeline company is seeking a “clarification” on the PSC’s Nov. 20 decision, a TransCanada spokesman said.
The approved line was not TransCanada’s preferred route for the Keystone XL pipeline, but for a more costly alternative that would add 5 miles (8 km) of pipeline. 
In fact, this is the story (see graphic below), keep in mind, landowners along the "approved route" have not been contacted and may not even know they are now involved:

From Norfolk Daily News:
The alternative route selected by the PSC runs east of TransCanada’s preferred route and makes the pipeline cross parts of seven counties not previously in the path of Keystone XL.
The different counties now in the pipeline’s path are Madison, Stanton, Platte, Colfax, Butler, Seward and Saline. In addition, the pipeline route has been changed somewhat in Antelope and Jefferson counties.
As part of Monday’s brief commission meeting, Commissioner Chrystal Rhoades of Omaha read from a prepared dissent and said many of the landowners along the now-approved route may not be aware of the alternative route because no notice was given to them by TransCanada or the state.
As I noted earlier, the Nebraska regulators voted "yes" 3 - 2 to kill the Keystone XL. 

Bust! Sasol Scrubs US GTL Plant In Louisiana -- November 27, 2017 -- The Market And Energy Page, Part 2, T+310

From Oil & Gas Journal:
  • Sasol: mentioned many times on the blog
  • Sasol: ending its "already suspended" gas-to-liquids projects in Louisiana
  • a strategic retreat from a business in which it has been an international leader
  • low crude oil prices the reason
  • the company will no longer invest in greenfield GLT projects
  • Sasol has been in the GTL business for 60 years
  • more recent start-up: a 34,000-b/d Oryx plant at Ras Laffan Industrial City, Qatar 
Apple, Inc: friends in California bought an iPhone X and then received their choice of an iPhone 8/8 Plus for free. Speaks volumes. Mostly bad news for Samsung, I assume, but others might disagree. But that's $1,000 for two brand new iPhones -- about $500 apiece when averaged out.

Pop-up ads: some people complain about targeted ads. I love them. I got a pop-up ad this morning reminding me of a Christmas gift I otherwise would have forgotten.

Portland, OR: Companies sour on ‘progressive’ city amid death threats, homelessness, rampant crime. Columbia Sportswear may flee downtown Portland after a series of frightening encounters with the city's homeless population, including car break-ins, human waste dumped by the office's front door and threats to its employees. Our younger daughter who lives in Portland seldom visits downtown Portland for those reasons; when I visit her I minimize my visits downtown.

Keystone Pipeline To Re-Open After Spill; WTI Drops Almost 2%-- November 27, 2017

Active rigs:

Active Rigs543764183191

WTI down almost 2% after CNBC reported that the Keystone north leg would open back up, Tuesday, November 28, 2017.

Four new permits:
  • Operators: Whiting (3); Abraxias
  • Fields: Stockyard Creek (Williams); Pershing (McKenzie)
  • Comments:
One producing well (DUCs) reported as completed: pending
  • 27999, 1,212, CLR, Jersey 7-6H, Alkali Creek, t11/17; cum --

Time For A Break -- November 27, 2017

Bring on global warming! I cannot believe how nice the weather has been for the past several days here in north Texas. Today, it started out at 66 degrees, it's now 73 degrees, and will reach a high of 77 degrees. Not a cloud in the sky and no wind. Absolutely perfect for biking.

Yesterday afternoon my wife wanted sushi. The only place we generally go for sushi any more these days is Kula / Kurasushi, a revolving sushi bar in Plano, about twenty minutes from where we live. I always have sake when I have sushi there (when we used to go to Kabeya in Southlake I always had a martini). They only have four brands to choose from; I know nothing about sake and have no plans at the moment to learn, though that may change.

I always get the smallest bottle possible, a 180-ml bottle of hakutsura, out of the refrigerator, no ice. The very, very small bottle ($6.95) would be enough for the two of us but my wife does not drink any alcohol -- makes her too sleepy. To be a sport, she will taste a thimble-full, as they say.

Yesterday I was looking at the label (again) and noted for the first time a sake meter value. I had never noticed that before. The hakutsura I get has a sake value of +4. It's interesting that the "wine world" hasn't come up with a similar grading system. It would be a huge help. (I don't have a dog in that fight; I quit drinking wine ages ago. There was no rhyme or reason to the price and the quality.)

I can't imaging having any sake with a meter value less than +4 with sushi. Sweet sake needs to be a dessert drink, I would think.

I won't drink sake at home, and except with sushi, I wouldn't drink it elsewhere.

By the way, at Kula's they also have excellent ramen. New to the menu is tantanramen (various spellings):
Tan Tan Ramen or Dan Dan Noodle are Sichuan noodle dish traditionally with miso pork mince, a sesame and spicy chilli soup broth. The sesame and chilli combine to make a really delicious ramen broth with a spicy kick to it! 
I wanted to try a broth with chili in it and it was perfect. My hunch is it will go over well here in Texas. Apparently the noodles are just as important as the broth, but I did not notice; it was all about the broth and it was spicy.

I've pretty much quit my study of martinis (quit drinking martinis about a year ago); and have pretty much quit drinking whiskey (in the last month or so); and, if I drink anything now, it's my old standby, rum and Coke.

I have finally decided, after 40 years, I suppose, that the only beer I care for are IPAs. I would have an occasional Bitburger Pils if I could find the bottles in this area, I suppose, but seldom seen. I think I can count the number of beers I have had in the past year on two hands and two toes.

Tequila? Never. I "figured out" Tequila last year and have no taste for it (and way too expensive for brand names). Perhaps again next summer in the very, very hot weather while biking, I will stop at the restaurant (Cotton Patch Cafe) at the north end of Main Street, Grapevine, that practically gives margueritas away to draw customers to the bar. Best deal on Main Street. But only one if biking. And only one, regardless (LOL).


I couldn't remember the name of the restaurant at the north end of Main Street so I had to look it up (I was pretty certain which one it was but wanted to make sure). I had to narrow my search for restaurants to "American/variety" and to "downtown" Grapevine, and there were still 212 restaurants to go through -- fortunately alphabetical so it did not take too long to find it.

But historical Grapevine is all of four city blocks on either side of Main street  -- actually shorter than downtown Main Street in Williston, ND -- and 212 restaurants in that area serving "American/variety." I assume some Mexican and some Italian restaurants were in the mix.

Speaking of which, this area is a lot more Italian than one would think. A lot of Italian restaurants and even an Italian car show once a year featuring Italian race cars. The #1 (?) Italian restaurant on Main Street has recently expanded.

Sophia enjoyed chocolate gelato ice cream on Main Street over the weekend, $4.00 for the small cup and it was the perfect amount and a very, very fair price.

The Market And Energy Page, T+310 -- November 27, 2017


Later, 3:01 p.m. Central Time: wow, was I wrong! CNBC says the Keystone pipeline will open -- date not given -- but it must be soon -- WTI down 1% or thereabouts. 

Original Post

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on anything you read here or think you  may have read here.

Markets: all three major indices -- the Dow, Nasdaq, and the S&P 500 all hit record highs at the open today. This would be the 55th record close for the S&P 500 if the number holds throughout the day. One wonders how Paul Krugman, Andrew Ross Sorkin, and Mark Cuban are all doing. Not.

Synchronized: the WSJ suggests the market is due to global synchronization --
Stocks Around the Globe Stage Most Widely Shared Rally in Years Investors say stock rally is a culmination of improving corporate earnings, strengthening economies and supportive monetary policies. [A "word search" revealed that "Trump" was not mentioned in the article: note the first year of the Bush administration, the first year of the Obama administration; and, the first year of the Trump administration. 

Bezos: no one has reached $1 trillion so quickly, according to CNBC.

Crestwood Equity Partners in the news today; the company is in the Bakken, see first link (the Motley Fool link below):
One of those developments is the first phase of the Bear Den processing plant in the Bakken, which it expected to start up shortly after the third quarter ended. That facility will separate raw natural gas into higher-valued natural gas liquids for producers in the area, earning Crestwood a fee as it processes those volumes. Meanwhile, the company expects to bring the second phase of that project online by the end of next year, while finishing a similar plant in the Delaware Basin by the third quarter of 2018.
AMLP: an MLP ETF. Holdings.

RDS-A: Zacks is reporting that RDS-A may begin paying its full-cash dividend (instead of scrip dividends). RDS-A and RDS-B both pay the same, nearly 6%. The last time RDS raised its dividend (from 90 cents to 94 cents per quarter) was back in May, 2014.

Beach vacation: the Brits have released their list of the world's top 25 beaches. There are no beaches in California listed, but Oregon has one beach on the list. Cancun was not mentioned on the list, nor was Riviera Maya, although it may be included or near one of the other beaches mentioned. I don't know the geography of Mexican beaches.

Net neutrality. No links but my thoughts --
  • the new rules will have a much bigger effect than folks realize
  • at first, the consumer will appear to get the short end of the straw ("will get screwed" in the jargon of the day)
  • entities like the NFL and MLB might do very, very well 
  • it will have no effect on C-SPAN; it could be detrimental to PBS but I doubt it
  • over time, the rules will vastly improve the internet experience
  • whether or not the average consumer will benefit is hard to predict

Monday Morning -- November 27, 2017

WTI: there will be a flurry of articles with regard to pricing of WTI/Brent anticipating OPEC's decision. This is probably the best review I've seen (or at least the outlook most aligned with my own thoughts), over at Seeking Alpha:
  • this month marks the third anniversary of OPEC's 2014 "shot heard 'round the world" in the oil price war with U.S. shale producers
  • the supply response from U.S. shale producers is so fast, increasing demand can easily be met by existing oil and gas inventories and resources
  • if current trends persist, we can see U.S. production hitting 10 MMBopd in 2018, driving U.S. oil exports to new highs
  • U.S. and OPEC crude oil inventories remain above five-year averages
  • in our view, what’s driving the recent run-up in oil prices is a combination of unfounded optimism driven by the decline in oil inventories combined with renewed geopolitical risks. We expect OPEC to extend current production quotas and there will be no bullish surprise
In other words, a "wash."

In other words:
  • there's a glut of oil in the US, although some say the global supply-demand situation has already re-balanced
  • US shale operators locked in pricing for 2018 when WTI recently (and briefly) hit $59 
  • if $50 is the new floor for WTI, the amount of oil brought to the market by US shale operators will increase, putting a damper on the ceiling
  • Saudi remains in deep doo-doo
Fear will drive prices in 2018: from Forbes, the same story as that linked in the story above.

OPEC-Russia vs US: Bloomberg has an interesting graph, but I bet it takes you ten minutes to figure it out. LOL. It's a great graph but very different from most graphs. There may be a 3-year tug-of-war between OPEC-Russia and the US but right now, clearly, the US is winning. And by a large margin.

The graph at the link is a "long" vertical graph and somewhat interactive.  Below is a screenshot of the graph for the month of November. At $63 (Brent), OPEC-Russia is producing about 9% more than they did in 2014 (my hunch: most of that increase is Russian, could be wrong); whereas, the US is producing about 15% more in late 2017 than it did on January 1, 2014.

Incredible: US new-home sales unexpectedly rise to highest in a decade. Again, a "word search" reveals no mention of  "Trump." In Bloomberg. Headline at Fortune, new US home sales just reaced a milestone. Headline at Los Angeles Times, US home sales rise at fastest pace in a decade, causing a surge in prices. Ya gotta love it. Folks wouldn't be buying houses if they were negative about the economy. I wonder how Mark Cuban, Andrew Ross Sorkin, Paul Krugman, et al are doing with their prognostications?

Back To The Bakken

Active rigs:

Active Rigs553764183191

RBN Energy: will US oil markets be roiled by a new FERC order?
Last Wednesday, November 22, the Federal Energy Regulatory Commission acted on a Petition for Declaratory Order by Magellan Midstream Partners in which the midstreamer asked for FERC’s blessing to establish a marketing affiliate to “buy, sell and ship” crude oil on pipelines owned by Magellan as well as pipes owned by other companies.
Today Magellan does not have such an affiliate, although many of its competitors do.
Most of those competitors use their affiliates to generate incremental throughput on their pipelines, sometimes by doing transactions that result in losses for the marketing affiliate, but that are still profitable for the overall company because the marketing arm pays its affiliated pipeline the published tariff transportation rate.
FERC denied Magellan’s request, coming down hard on such transactions as “rebates” specifically prohibited by the law governing interstate oil pipelines. In today’s blog, we take a preliminary look at FERC’s Magellan order and what it could mean for U.S. crude oil markets.

The FERC finding spells out aspects of crude oil pipeline regulation that have been in place for over 100 years, but have been subject to varying degrees of interpretation and enforcement and are very different from the rules that cover natural gas and gas pipelines.
Although crude and gas pipelines that cross state lines are both regulated by FERC, the laws and rules governing crude oil pipelines are based on an entirely different statute — the Interstate Commerce Act instead of the Natural Gas Act  — and the evolution of FERC regulation of oil pipelines has a pretty tortured history ever since FERC took over this area of regulation from the Interstate Commerce Commission.

These oil pipeline regulations have been around since the Hepburn Act of 1906, which made oil pipelines subject to the ICA of 1887. Up until that time, the ICA had applied only to railroads (which turns out to be relevant to the Magellan order).
Under the ICA, crude oil pipelines became “common carriers” subject to all sorts of rules related to who gets access to what services (but not whether or not a pipeline can be built, which remains in the purview of the states for crude pipes).
There are two important aspects of these ICA-based regulations relevant to the Magellan PDO. First, the rules for setting crude oil pipeline tariffs are somewhat ambiguous, to say the least. The tariffs aren’t necessarily based on costs, the approach to setting rates can vary over the life of a pipeline, and the rules have pragmatically mutated from time to time, to the extent that they can change without a lot of warning.
All this provides both opportunities and risks that don’t exist to the same degree for gas pipelines. Second, the rules governing permissible transactions on crude pipes are quite different than those for gas pipelines, and are even more ambiguous than the crude oil pipeline tariff rules. For example, gas pipes are subject to highly structured mechanisms for any transaction that would move gas on a pipeline for a rate lower than the published tariff. Whether the transactions are between the pipeline and a shipper or between two shippers (one “renting” its capacity from another), the gas deals are subject to rules covering what is legal, and how the transactions must be broadcast to the marketplace (via the gas pipeline’s “Electronic Bulletin Board” — or EBB — websites). No such structured mechanisms exist for oil pipelines.